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Reasons for Issuing The IFRS Standards 1

Reasons for Issuing The IFRS Standards 1

Reasons for Issuing The IFRS Standards 1 : The International Accounting Standards Board issued IFRS 1 in June 2003. IFRS 1 replaced SIC-8 First-time Application of IASs as the Primary Basis of Accounting. The Board developed the IFRS to address concerns about the full retrospective application of IFRSs required by SIC-8.

Reasons for Issuing The IFRS Standards 1

Reasons for Issuing The IFRS Standards 1 : Subsequently, IFRS 1 was amended many times to accommodate first-time adoption requirements resulting from new or amended IFRSs. As a result, the IFRS became more complex and less clear. In 2007, therefore, the Board proposed, as part of its annual improvements project, to change IFRS 1 to make it easier for the reader to understand and to design it to better accommodate future changes. The version of IFRS 1 issued in 2008 retains the substance of the previous version, but within a changed structure. It replaces the previous version and is effective for entities applying IFRSs for the first time for annual periods beginning on or after 1 July 2009. Earlier application is permitted.

Reasons for Issuing The IFRS Standards 1

Reasons for Issuing The IFRS Standards 1 : In general, the IFRS requires an entity to comply with each IFRS effective at the end of its first IFRS reporting period. In particular, the IFRS requires an entity to do the following in the opening IFRS statement of financial position that it prepares as a starting point for its accounting under IFRSs:
(a) recognise all assets and liabilities whose recognition is required by IFRSs;
(b) not recognise items as assets or liabilities if IFRSs do not permit such recognition;
(c) reclassify items that it recognised under previous GAAP as one type of asset, liability or component of equity, but are a different type of asset, liability or component of equity under IFRSs; and
(d) apply IFRSs in measuring all recognised assets and liabilities.

Reasons for Issuing The IFRS Standards 1

Reasons for Issuing The IFRS Standards 1 : The IFRS grants limited exemptions from these requirements in specified areas where the cost of complying with them would be likely to exceed the benefits to users of financial statements. The IFRS also prohibits retrospective application of IFRSs in some areas, particularly where retrospective application would require judgements by management about past conditions after the outcome of a particular transaction is already known.

Reasons for Issuing The IFRS Standards 1

Reasons for Issuing The IFRS Standards 1 : The objective of this IFRS is to ensure that an entity’s first IFRS financial statements, and its interim financial reports for part of the period covered by those financial statements, contain high quality information that:
(a) is transparent for users and comparable over all periods presented;
(b) provides a suitable starting point for accounting in accordance with International Financial Reporting Standards (IFRSs); and
(c) can be generated at a cost that does not exceed the benefits.

Reasons for Issuing The IFRS Standards 1

Reasons for Issuing The IFRS Standards 1 : An entity shall apply this IFRS in:
(a) its first IFRS financial statements; and
(b) each interim financial report, if any, that it presents in accordance with IAS 34 Interim Financial Reporting for part of the period covered by its first IFRS financial statements.

Reasons for Issuing The IFRS Standards 1

Reasons for Issuing The IFRS Standards 1 : An entity’s first IFRS financial statements are the first annual financial statements in which the entity adopts IFRSs, by an explicit and unreserved statement in those financial statements of compliance with IFRSs. Financial statements in accordance with IFRSs are an entity’s first IFRS financial statements if, for example, the entity:
(a) presented its most recent previous financial statements:
(i) in accordance with national requirements that are not consistent with IFRSs in all respects;
(ii) in conformity with IFRSs in all respects, except that the financial statements did not contain an explicit and unreserved statement that they complied with IFRSs;
(iii) containing an explicit statement of compliance with some, but not all, IFRSs;
(iv) in accordance with national requirements inconsistent with IFRSs, using some individual IFRSs to account for items for which national requirements did not exist; or
(v) in accordance with national requirements, with a reconciliation of some amounts to the amounts determined in accordance with IFRSs;

Reasons for Issuing The IFRS Standards 1

Reasons for Issuing The IFRS Standards 1 : This IFRS applies when an entity first adopts IFRSs. It does not apply when, for example, an entity:
(a) stops presenting financial statements in accordance with national requirements, having previously presented them as well as another set of financial statements that contained an explicit and unreserved statement of compliance with IFRSs;
(b) presented financial statements in the previous year in accordance with national requirements and those financial statements contained an explicit and unreserved statement of compliance with IFRSs; or
(c) presented financial statements in the previous year that contained an explicit and unreserved statement of compliance with IFRSs, even if the auditors qualified their audit report on those financial statements.

Reasons for Issuing The IFRS Standards 1

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